The risks associated with hydropower investments in South East Europe are high and growing

According to a new report by CEE Bankwatch, EuroNatur, Riverwatch and WWF Adria, which also highlights nine cases of high-risk projects.

Although hundreds of small hydropower plants – very damaging to biodiversity – have been built in the region over the past decade, attempts to build new hydropower plants above 10 MW have largely failed, only Albania and Slovenia succeeding.

Vulnerability to drought, legal issues, growing public resistance and lack of funding are among the factors that have halted a slew of large hydropower projects in recent years, including two on the Vjosa River in Albania, two in the Mavrovo National Park in North Macedonia and several on the Morača and Vrbas rivers in Montenegro and Bosnia and Herzegovina.

Hydropower, along with coal, has traditionally played a major role in South Eastern Europe, but climate change is calling this role into question. Albania has added around 600 MW in large power plants and several hundred additional megawatts in small power plants since 2010, but average hydropower generation barely increased between 2010 and 2020. In Bosnia and Herzegovina, Croatia and Montenegro, which added only small hydroelectric plants, the average production even slightly decreased.

Undeterred, governments and utilities in the region are eager to build even more large hydroelectric plants. Bosnia and Herzegovina is particularly ambitious, planning at least 12 large dams despite its failure to complete a single large virgin power plant in the past decade.

Funding is becoming scarce as the European Investment Bank, the European Bank for Reconstruction and Development and Germany’s KfW have become more cautious lately, leaving Chinese and Turkish banks, as well as the American Development Finance Corporation international (DFC), among the few to want to bet on such a risky sector.

Yet, although Chinese companies are involved in several projects in Bosnia and Herzegovina – including the Ulog factory on the upper Neretva, a series of three factories on the Bistrica, and potentially also three other factories on the upper Drina – the only confirmed Chinese funding is for the controversial 160 MW Dabar power plant, for which an Eximbank loan of 180 million euros was signed in January this year.

Pippa Gallop, CEE Bankwatch Network“Hydropower generation in the region goes up and down like a yo-yo due to climate change, making the addition of dams unnecessary. This is particularly evident in countries like Albania, Bosnia and Herzegovina, Croatia and Montenegro, which are already highly dependent on hydroelectricity. It is completely incomprehensible that at the end of 2021 Montenegro only had 2.5 MW of solar PV installations. The diversification of renewable energies and a serious increase in energy efficiency are urgently needed.

Amélie Huber, EuroNatur Foundation “Hydropower investors continue to be drawn to the prospects of a free, always-available source of energy, but hydropower has long ceased to be that: time and cost overruns are at risk. The agenda, especially when it comes to large hydropower plants and river flows, is no longer reliable.And the very negative impact of hydropower on the biodiversity of river systems must be taken into account. Countries whose energy systems depend on hydropower will pay a high price as the impacts of climate change intensify and droughts and floods become more frequent.

Ulrich Eichelmann of Riverwatch “Besides the energy-related aspects that oppose the construction of dams on Balkan rivers, there is also the fact that rivers like the Neretva, the Drina and others have incredible ecological value. Do you dare destroy the last remaining ancient forests to produce pellets? We would do the same with these remaining pristine rivers if we allowed them to be dammed. Fortunately, people increasingly understand the true value of Balkan rivers and increasingly fight dam projects and win.

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